Cyient Dlm: Kotak Retains 'reduce' Rating, Shares Target Price

SUMMARY

Kotak Institutional Equities has lowered its FY2026 estimates for Cyient DLM by 8% owed to weaker topline maturation coupled pinch rising finance costs. This revision follows a continued simplification successful nan company's bid book. Kotak retained its 'Reduce' standing connected Cyient DLM, mounting a adjacent worth target of Rs 450, which implies 24 times nan estimated March 2027 EPS.

Cyient DLM's Q4 profit fell short of expectations, chiefly owed to weaker-than-expected execution pursuing nan ramp-down of nan BEL contract, according to Kotak. The brokerage expressed interest complete nan persistent anemic bid inflow, marking nan tenth consecutive 4th of bid book decline. A muted bid backlog alongside reduced gross maturation successful nan home marketplace aft nan BEL bid completion is expected to consequence successful a sluggish commencement to FY2026 for Cyient.

Kotak noted that nan ramp-up of orders from caller clients and nan effect of nan Altek acquisition stay cardinal areas to monitor. While nan brokerage sees imaginable for betterment successful 2H FY2026, this is contingent connected securing caller orders and ramping up deliveries from precocious onboarded clients.

Cyient's performance crossed its awesome export geographies shows mixed trends. The institution has important vulnerability to European defence firms for illustration Thales, Safran, and BAE, which whitethorn spot a boost successful bid inflow owed to accrued European defence spending. In nan US, Cyient expects gross betterment from Honeywell's Anthem, Micro VCS programme, and ABB, driven by a rebound successful nan US lipid and state market.

However, home marketplace conditions stay challenging. With nary awesome tenders aliases orders anticipated successful nan pipeline, Kotak predicts anemic home marketplace ordering successful nan first half of FY2026. The BEL bid had been a superior gross driver, and its absence highlights nan market's vulnerability.

Kotak projects Cyient's FY2026 gross maturation astatine 10%, pinch home gross weaknesses offset by a pickup successful exports, supported by nan European defence segment, caller logo additions, and nan Altek acquisition. Nevertheless, nan lower-margin BEL bid is expected to impact EBITDA margins slightly, estimated astatine 10.0% and 10.2% for FY2026 and FY2027, respectively.

Overall, Kotak foresees that Cyient's betterment successful nan second half of FY2026 hinges connected successful caller bid wins and nan effective ramp-up of orders from caller clients. This cautious outlook reflects nan company's existent challenges and early opportunities.

Published on: Apr 23, 2025 11:25 AM IST